Social capital is a way of thinking about economics and society that accounts for the value of intangibles such as shared values, social cohesion, community, trust, and cooperation. These are just as essential to the growth and success of a society and, importantly, of individuals within a society, as they are more tangible forms of capital.
Historically, Jane Jacobs (May 4, 1916–April 25, 2006), an American-Canadian author, made important and influential arguments for the value of social capital in urban neighborhoods, showing that successful and functional neighborhoods depended on social capital as much as on material wealth. French sociologist Pierre Bourdieu (August 1, 1930–January 23, 2002) wrote several seminal works showing how social capital contributed to individual success and created a sort of cultural infrastructure for professions. His work was seminal in developing an understanding of inequality of opportunity based not just on disparities of money but of social capital.
In school, for example, social capital is manifested in knowledge of unspoken rules and behaviors. A student from a middle-class background often knows how to negotiate such issues in a way a first-generation college student might not. This can lead to an advantage in grades for students who understand how to work the system, as it were. At work, someone who knows the unspoken rules of how to dress "professionally," how to ask for a raise, or how to advocate a position in a meeting according to unspoken social conventions will be more likely to get raises or promotions than someone who is perceived as not fitting in with the corporate culture.
In some ways, social capital works to make organizations function more smoothly, but it can also exacerbate inequality and make it harder for outsiders to succeed.